Wages will be protected from the cuts for three years – but the workers have been told they must accept them or stay sacked.
Letters were delivered on Wednesday warning of dismissal from October 31 and "re-engagement" on November 1 under new contracts.
An internal council document seen by the Yorkshire Evening Post states: "Employees who do not accept the offer of re-engagement on November 1 will have their employment terminated on 31 October.....
"If they report for work on or after 1 November they should be asked to leave the premises as they are no longer an employee of Leeds City Council."
Regret
New pay structures are being introduced by councils across the country to comply with equal pay legislation.
The main union involved with Leeds workers condemned the action as "extreme" but the Conservative and Liberal Democrat ruled council insists it took the action "with regret."
Full-time GMB official Bill Chard said: "It is an extreme act to dismiss people, especially this many. Our members feel they cannot trust the council any more because of this extreme action.
"For an organisation to come along and dismiss people who may have worked loyally for the council for 20 or 30 years to enforce an unfair pay system is wrong."
A council spokeswoman stressed it had spent two years working with unions to reach an agreement on the new pay and grading structure.
It means increases for some, no change for others, and wage cuts for a minority - 1,100 in the case of Leeds.
Some face losing over £3,000-a-year.
The Leeds workers affected are employed across a range of council services.
A spokeswoman said: "Over 10,000 of our staff are better off under the new structure and their pay has actually increased. "About the same number will earn the same salary.
"Regrettably, there are a small number of colleagues who may be adversely affected under the new structure.
"The council is working closely with the trade unions to review wherever possible services, jobs and methods of working to reduce the loss to employees."
Refuse workers took strike action in protest at the proposals, but the action was lifted on the understanding that negotiations would take place aimed at further protecting wage levels.
The council document seen by the YEP also states: "The next stage of the process is the termination and immediate re-engagement of contracts for 1,100 employees, whose jobs experience a reduction in basic pay, and for whom protection arrangements are in place.
"It is with regret that the Council has to take this action, however it is now the only remaining method of implementing National "Single Status Agreement that will ensure the Council's pay structure complies with equal pay legislation."
The report says 15,500 workers have accepted new contracts.
Another 6,700 workers, whose wages either increase or are not affected by the changes, will have new contracts imposed on them.
The council spokeswoman added: "This is regrettable, but it is now the only remaining method of implementing the National Single Status Agreement that will ensure the Council's pay structure complies with equal pay legislation."